STOCK PURCHASE AGREEMENT
THIS
STOCK PURCHASE AGREEMENT (the “Agreement”) made and entered into as of January
16, 2007 is by and among XXXX XXXXXXXX (the “Seller”), holder of shares of
$.001 par value Common Stock of XXXXXXXX.XXX, INCORPORATED, a Nevada corporation
(“Company”), LAKEWOOD GROUP LLC (“Buyer”) and GRUSHKO & XXXXXXX, P.C. (the
“Escrow Agent”).
RECITALS
WHEREAS,
Seller is the owner of 825,000 shares of $.001 par value Common Stock of
Xxxxxxxx.xxx, Incorporated (the “Share” or “Shares”); and
WHEREAS,
the Buyer desires to purchase and Seller desires to sell the Shares to Buyer
for
the consideration and upon the terms and conditions hereinafter
contained;
NOW,
THEREFORE, in consideration of the mutual covenants and agreements contained
herein and in reliance upon the representations and warranties hereinafter
set
forth, the parties agree as follows:
1. Purchase
and Sale of Shares.
Subject
to the terms and conditions of this Agreement, Seller agrees to sell, assign,
transfer and deliver to Buyer the Shares at a price of $0.001 per Share (the
“Purchase Price”), and subject to the terms and conditions of this Agreement,
Buyer agrees to purchase from Seller the Shares at the Purchase Price
.
2. Escrow
Account.
Buyers
and Seller shall establish an escrow account (the “Escrow Account”) with the
Escrow Agent upon the following terms and conditions:
(a) Each
Buyer shall deposit funds by wire transfer or check into the trust account
of
the Escrow Agent in an amount equal to the aggregate Purchase Price (the
“Purchase Funds”).
(b) Seller
shall deposit into the Escrow Account stock certificates for the number of
Shares, which stock certificates shall be registered in Buyer’s name on the
books and records of the Company (the “Share Certificate”).
(c) Upon
receipt of the Share Certificate from the Seller and the Purchase Funds from
Buyer, the Escrow Agent shall deliver the Purchase Funds to the Seller and
shall
deliver the Share Certificate to Buyer.
(d) If
either
the Share Certificate or the Purchase Funds have not been received by the Escrow
Agent on or before 5:00 p.m. Eastern time on January 31, 2007, unless otherwise
instructed, in writing, by the Seller and Buyer, the Escrow Agent shall return
the Share Certificate to the Seller if they are being held by the Escrow Agent,
or shall return the Purchase Funds to Buyer without deduction or offset if
they
are being held by the Escrow Agent.
(e) Anything
to the contrary herein notwithstanding, a closing hereunder must occur
contemporaneously with a closing under a certain Subscription Agreement dated
at
or about the date hereof between the Company and Buyer in connection with the
purchase by Buyer from the Company of a promissory note in the principal amount
of $1,000,000 (“Note”).
3. Indemnification.
Buyer
and Seller, individually and collectively, their successors and assigns, agree,
jointly and severally, to indemnify, defend and hold harmless the Escrow Agent
from and against any and all costs (including, without limitation, all legal
fees and any related expenses), liabilities, claims and losses arising out
of or
in connection with this Agreement, except as provided in paragraph 6
below.
4. Representations
and Warranties by the Seller.
Seller
represents and warrants to each of the Buyers as follows:
(a) Seller
owns the Shares and shall transfer to Buyer at the Closing good and valid title
to said Shares free and clear of all liens, claims, options, charges and
encumbrances whatsoever and upon the consummation of the transaction
contemplated herein good title in the Shares shall vest in Buyer free of all
liens, charges, encumbrances and restrictions except those arising under the
Securities Act of 1933.
(b) Seller
has full power and authority to execute this Agreement and consummate the
transactions contemplated hereby, and this Agreement is binding on Seller and
enforceable in accordance with its terms. The execution and delivery of this
Agreement and consummation of the transactions contemplated hereby do not
violate or conflict with or constitute a default under any contract, agreement
or commitment of any kind to which Seller is a party or by which Seller or
Seller’s property is bound, or to Seller’s knowledge, any existing applicable
law, rule, regulation, judgment, order or decree of any government, governmental
instrumentality or court, domestic or foreign, having jurisdiction over Seller
or any of Seller’s property and when delivered in accordance with the terms
hereof, will constitute the valid and binding obligation of the Seller
enforceable against the Seller in accordance with its terms.
(c) There
is
no action, suit, inquiry, notice of violation, proceeding or investigation
pending or, to the knowledge of the Seller, threatened against or affecting
the
Seller or any of its respective properties before or by any court, arbitrator,
governmental or administrative agency or regulatory authority (federal, state,
county, local or foreign) (collectively, an “Action”) which (i) adversely
affects or challenges the legality, validity or enforceability of any of the
documents hereunder or the Shares or (ii) could, if there were an unfavorable
decision, individually or in the aggregate, have or result in a material adverse
effect.
(d) The
Seller is not (i) in default under or in violation of (and no event has occurred
which has not been waived which, with notice or lapse of time or both, would
result in a default by the Seller), nor has the Seller received notice of a
claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement or any other agreement or instrument to which it is
a
party or by which Seller or any of Seller’s properties is bound, (ii) is in
violation of any judgment or order of any court, arbitrator or governmental
body, or (iii) is in violation of any statute, rule or regulation of any
governmental authority, in each case of clauses (i), (ii) or (iii) above, except
as could not individually or in the aggregate, have or result in a material
adverse effect.
5. Representations
and Warranties by the Buyer.
Buyer
represents and warrants to the Seller as follows:
(a) Buyer
understands the speculative nature and risks associated with an investment
in
the Shares, confirms that the purchase of the Shares is suitable and consistent
with Buyer’s investment program and that Buyer’s financial position enables
Buyer to bear the risks of such investment; and understands that there is only
a
limited public market for the Shares.
(b) Buyer
acknowledges that the Shares are “restricted securities” as that term is used in
Rule 144 of the Securities Act of 1933, as amended (the “Act”); that the Shares
may be sold, assigned or otherwise transferred only pursuant to an effective
registration statement under the Act or pursuant to an exemption from
registration under the Act, the availability of which is to be established
to
the satisfaction of the Company; and that the Company is not obligated to
register the Shares under any federal and/or state securities laws.
2
(c) Buyer
has
had the opportunity to ask questions of the officers and directors of the
Company and to receive additional information from the Company, to the extent
that the Company possessed such information, necessary to evaluate the merits
and risks of an investment in the Shares.
(d) Buyer
has
sufficient knowledge and experience in financial matters to evaluate the merits
and risks of an investment in the Shares.
(e) Buyer
has
sought legal advice with a lawyer of its choosing with regard to the purchase
of
the Shares.
6. Concerning
the Escrow Agent.
To
induce the Escrow Agent to act hereunder, it is further agreed by the Seller
and
Buyer that:
(a) This
Agreement expressly sets forth all the duties of the Escrow Agent with respect
to any and all matters pertinent hereto. No implied duties or obligations on
the
part of the Escrow Agent shall be read into this Agreement. The Escrow Agent
shall not be bound by the provisions of any agreement among the other parties
hereto except this Agreement.
(b) The
Escrow Agent shall not be liable for any action or failure to act in its
capacity as Escrow Agent hereunder unless such action or failure to act shall
constitute gross negligence or willful misconduct on the part of the Escrow
Agent, in which case there shall be no indemnification obligations as provided
in Paragraph 3, and the Escrow Agent shall indemnify and hold harmless the
Seller, Buyer and their respective officers, directors, agents and employees
from and against any loss, cost or expense (including reasonable attorneys’
fees) that they may suffer or incur as a consequence of such gross negligence
or
willful misconduct.
(c) The
Escrow Agent shall be entitled to rely upon any order, judgment, certification,
demand, notice, instrument or other writing delivered to it hereunder without
being required to determine the authenticity or the correctness of any fact
stated therein or the propriety or validity of the service thereof. The Escrow
Agent may act in reliance upon any instrument or signature believed by it to
be
genuine and may assume, unless it has actual knowledge to the contrary, that
any
person purporting to give notice or receipt or advice or make any statement
or
execute any document in connection with the provisions hereof has been duly
authorized to do so.
(d) The
Escrow Agent may act pursuant to the advice of counsel with respect to any
matter relating to this Agreement and shall not be liable for any action taken
or omitted in accordance with such advice, except as provided in paragraph
6(b)
above.
(e) The
Escrow Agent does not have any interest in the Shares or Purchase Funds, but
is
serving as escrow holder only and having only possession thereof, and is not
charged with any duty or responsibility to determine the validity or
enforceability of any such document.
(f) The
Escrow Agent (and any successor Escrow Agent) may at any time resign as such
by
delivering the Share Certificate and the Purchase Funds to any successor Escrow
Agent, jointly designated by the other parties hereto in writing, or to any
court of competent jurisdiction, whereupon the Escrow Agent shall be discharged
of and from any and all further obligations arising in connection with this
Escrow Agreement thereafter. The resignation of the Escrow Agent will take
effect on the earlier of (a) the appointment of a successor (including a court
of competent jurisdiction) or (b) the day which is 5 days after the date of
delivery of its written notice of resignation to the other parties hereto.
If at
that time the Escrow Agent has not received a designation of a successor Escrow
Agent, the Escrow Agent’s sole responsibility after that time shall be to safe
keep the deposited Share Certificate and Purchase Funds and not make delivery
or
disposition thereof until receipt of a designation of successor Escrow Agent
or
a joint written disposition instruction by the other parties hereto or a final
order of a court of competent jurisdiction.
3
(g) In
the
event of any disagreement among the parties hereto resulting in adverse claims
or demands being made in connection with the Share Certificate or Purchase
Funds, or in the event that the Escrow Agent otherwise determines that the
Share
Certificate and/or Purchase funds should be retained, then the Escrow Agent
may
retain the Share Certificate and/or Purchase Funds until the Escrow Agent shall
have received (i) a final non-appealable order of a court of competent
jurisdiction directing delivery of the Share Certificate and/or Purchase funds,
or (ii) a written agreement executed by the other parties hereto directing
delivery of the Share Certificate and/or Purchase Funds, in which case the
Escrow Agent shall promptly deliver the Share Certificate and/or Purchase Funds
in accordance with such order or agreement. Any court order referred to in
(i)
above shall be accompanied by a legal opinion by counsel for the presenting
party reasonably satisfactory to the Escrow Agent to the effect that said court
order is final and non-appealable. The Escrow Agent shall make no independent
determination regarding the Share Certificates or Purchase Funds absent the
filing and notice of a legal action by one or both of the parties.
(h) This
Agreement shall be binding upon and inure solely to the benefit of the parties
hereto and their respective successors (including successors by way of merger)
and assigns, heirs, administrators and representatives and shall not be
enforceable by or inure to the benefit of any third party except as provided
in
paragraph 6(g) with respect to a resignation by the Escrow Agent. Each entity
that is a party hereto represents and warrants that they have the full power
and
authority to bind the entity and that Escrow Agent may rely upon such
representation with out further inquiry. This Agreement may be modified only
in
writing, signed by al of the parties hereto, and no waiver hereunder shall
be
effective unless in writing signed by the party to be charged.
7. (a) Reset.
Other
than in connection with (i) full or partial consideration in connection with
a
strategic merger, acquisition, consolidation or purchase of substantially all
of
the securities or assets of a corporation or other entity by the Company,
provided such issuances are not for the purpose of raising capital, (ii)
the
Company’s issuance of securities in connection with strategic license agreements
and other partnering arrangements so long as such issuances are not for the
purpose of raising capital, (iii) the Company’s issuance of Common Stock or the
issuances or grants of options to purchase Common Stock pursuant to stock option
plans and employee stock purchase plans described on Schedule
5(d)
to the
Subscription Agreement, (iv) underwritten public offerings by the Company,
(v)
as described in the Reports (as defined in the Subscription Agreement), and
(vi)
as described on Schedule
7
hereto
(collectively the foregoing are “Excepted
Issuances”),
if at
any time during the Compliance Period (as defined in the Subscription Agreement)
while the Buyer is holding Shares, the Company shall offer, issue or agree
to
issue any common stock or securities convertible into or exercisable for shares
of Common Stock (or modify any of the foregoing which may be outstanding) to
any
person or entity at a price per share or conversion or exercise price per share
which shall be less than $1.00, without the consent of Buyer, then the Seller
shall deliver, for each such occasion, additional Shares to Buyer so that the
average per share purchase price of the shares of Common Stock sold to Buyer
(of
only the Purchased Shares still owned by Buyer) is equal to such other lower
price per share. For purposes of this Section 7, the purchase price of the
Shares shall be deemed to be $1.00 (“Imputed
Share Price”).
The
delivery to the Buyer of the additional Shares shall be not later than the
closing date of the transaction giving rise to the requirement to issue
additional Shares (“Issuance
Date”).
The
Buyer is hereby granted by the Company the registration rights described in
Section 11 of the Subscription Agreement in relation to such additional Shares,
or at the election of the Buyer, registration rights, if any, granted in
connection with the dilutive issuance. For purposes of the issuance and
adjustment described in this paragraph, the issuance of any security of the
Company carrying the right to convert such security into shares of Common Stock
or of any warrant, right or option to purchase Common Stock shall result in
the
delivery of the additional Shares upon the sooner of the agreement to or actual
issuance of such convertible security, warrant, right or option and again at
any
time upon any subsequent issuances of shares of Common Stock upon exercise
of
such conversion or purchase rights if such issuance is at a price lower than
$1.00.
4
(b) Maximum
Exercise of Rights.
If the
application of the rights described in Section 7(a) would
or
could result in the beneficial ownership by Buyer and its affiliates of an
amount of Common Stock of the Company in excess of the sum of (i) the number
of
shares of Common Stock beneficially owned by the Subscriber and its affiliates
on an Issuance Date, and (ii) the number of shares of Common Stock issuable
pursuant to Section 7(a) with respect to which the determination of this
provision is being made on an Issuance Date, in excess of more than 4.99% of
the
outstanding shares of Common Stock of the Company on such Issuance Date, then
the issuance of such additional Shares in excess of 4.99% to Buyer will be
deferred in whole or in part until such time as Buyer is able to beneficially
own such common stock without exceeding the applicable maximum amount calculated
in the manner described above. For the purposes of the provision to the
immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the 1934 Act, as amended, and Regulation 13d-3
thereunder. Subject to the foregoing, the Subscriber shall not be limited to
aggregate conversions of 4.99%. The determination of when such common stock
may
be issued shall be made by Subscriber.
8.
Miscellaneous.
(a) The
subject headings of the paragraphs of this Agreement are included for purposes
of convenience only and shall not affect the construction or interpretation
of
any of its provisions.
(b) This
Agreement constitutes the entire agreement between the parties pertaining to
the
subject matter contained in it and supersedes all prior and contemporaneous
agreements, representations and understanding of the parties. No supplement,
modification or amendment of this Agreement shall be binding unless executed
in
writing by all the parties. No waiver of any of the provisions of this Agreement
shall be deemed, or shall constitute, a waiver of any other provisions, whether
or not similar, nor shall any waiver constitute a continuing waiver. No waiver
shall be binding unless executed in writing by the party making the
waiver.
(c) This
Agreement may be executed simultaneously in one or more counterparts, each
of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(d) Nothing
in this Agreement, whether expressed or implied, is intended to confer any
rights or remedies under or by reason of this Agreement on any persons other
than the parties to it and their respective successors and assigns, nor is
anything in this Agreement intended to relieve or discharge the obligation
or
liability of any third persons to any party to this Agreement, nor shall any
provision give any third person any right of subrogation or action over against
any party to this Agreement.
(e) This
Agreement shall be binding on and shall inure to the benefit of the parties
to
it and their respective heirs, legal representatives, successors and
assigns.
(f) If
any
legal action or any arbitration or other proceeding is brought for the
enforcement of this Agreement, or because of an alleged dispute, breach, default
or misrepresentation in connection with any of the provisions of this Agreement,
the successful or prevailing party or parties shall be entitled to recover
reasonable attorneys’ fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it or they may be
entitled.
(g) This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New York.
5
(h) The
parties hereby consents to the exclusive jurisdiction of all courts sitting
in
the State and County of New York, in connection with any action or proceeding
under or relating to this Agreement, and waive trial by jury in any such action
or proceeding.
(i) All
notices, requests, demands and other communications under this Agreement shall
be in writing and shall be validly given or made to another party if given
by
personal delivery, telex, facsimile, telegram or if deposited in the United
States mail, certified or registered, postage prepaid, return receipt requested.
If such notice, demand or other communication is given by personal delivery,
telex, facsimile or telegram, service shall be conclusively deemed made at
the
time of receipt. If such notice, demand or other communication is given by
mail,
such notice shall be conclusively deemed given forty-eight (48) hours after
the
deposit thereof in the United States mail addressed to the party to whom such
notice, demand or other communication is to be given as hereinafter set
forth:
|
If
to Seller:
|
Xxxx
Xxxxxxxx
|
c/o
Xxxxxxxx.xxx,
Incorporated
0000
Xxxxx Xxxxxx, Xxxxx 0000
Xxxxx
Xxxxxx, XX 00000
Fax:
(000) 000-0000
|
If
to Buyer:
|
Lakewood
Group LLC
|
000
Xxxx
00xx
Xxxxxx,
00xx
Xxxxx
Xxx
Xxxx,
XX 00000
Fax:
(000) 000-0000
|
If
to Escrow Agent:
|
Grushko
& Xxxxxxx, P.C.
|
000
Xxxxx
Xxxxxx, Xxxxx 0000
Xxx
Xxxx,
XX 00000
Any
party
may change its address for purposes of this paragraph by giving the other party
written notice of the new address in the manner set forth
above.
6
IN
WITNESS WHEREOF,
the
parties hereto have executed this Stock Purchase Agreement as of the date first
set forth above.
|
SELLER:
|
|
|
/s/
Xxxx
Xxxxxxxx
|
|
|
XXXX
XXXXXXXX
|
|
|
BUYER:
|
|
|
/s/
|
|
|
LAKEWOOD
GROUP LLC
|
|
|
ESCROW
AGENT:
|
|
|
GRUSHKO
& XXXXXXX, P.C.
|
|
|
By:
/s/
|
ACKNOWLEDGEMENT
Xxxxxxxx.xxx,
Incorporated agrees to cooperate with Buyer in fulfilling the purpose and intent
of this Agreement and not take any action or suffer inaction inconsistent with
Buyer’s lawful rights under this Agreement.
|
XXXXXXXX.XXX,
INCORPORATED
|
||
|
By:
/s/
|
||
|
Name:
|
||
|
Title:
|
||
|
By:
/s/
|
||
|
Name:
|
||
|
Title:
|
||
7
